Payment cards such as credit cards and debit cards are very widely used for all forms of financial transaction. The use of payment cards has evolved significantly with technological developments over recent years. Payment cards typically have a magnetic stripe readable by a magnetic stripe reader on a point of sale (POS) terminal to perform a transaction, and now generally also contain an integrated circuit (“chip cards” or “smart cards”) communicate with a smart card reader in the POS terminal. Using this approach, a transaction is typically confirmed by a personal identification number (PIN) entered by the card user. Cards of this type typically operate under the EMV standard for interoperation of chip cards and associated apparatus (such as POS terminals and ATMs). ISO/IEC 7816 provides a standard for operation of cards of this type.
Technology has further developed to provide payment cards which operate contactlessly—under EMV, these are covered under the ISO/IEC 14443 standard. Using such cards, the account number can be read automatically from the card by a POS terminal, generally using a short range wireless technology such as Radio Frequency Identification (RFID)—this approach is generally referred to as “contactless” or “proximity” payment. This is typically enabled by embedding of an RFID tag in a card body together with a suitable antenna to allow transmission and receipt of wireless signals—the transmissions may be powered by a radio frequency interrogation signal emitted by a proximity reader in the POS terminal. The present applicants have developed a proprietary system, known as PayPass®, for performing contactless transactions.
A recent development is the use of a computing device such as a mobile telephone as a proxy for a payment card. The present applicants have also developed a mobile payment application, Mobile PayPass™, which can be downloaded to a mobile cellular telephone handset (hereafter “mobile phone”) to act as a proxy for a payment card using Near Field Communication (NFC) technology standards, which are built in to the majority of current mobile phones. NFC is a development upon RFID, and NFC-enabled devices are able to operate in the same manner as RFID devices—though an NFC-device is active rather than passive, as it is powered by the mobile phone battery rather than relying on inductive pickup from a reader device. Using Mobile PayPass™, a user can conduct tapping based transactions with a proximity reader, as well as perform account management operations over an appropriate network interface (cellular, local wireless network) in an online banking interface with the user's account provider. A user will now commonly use his or her mobile phone in obtaining banking services, both in mobile payment (such as by use of Mobile PayPass™) and also in locating ATMs and participating merchants (which can be done for MasterCard with MasterCard Nearby™).
A variety of digital payment systems are now available or under development, often involving a combination of a payment application directed to the making of a payment card transaction with a digital wallet to hold personal information. One such system is Apple Pay™, and this and other such systems are showing rapid adoption in the market place.
One area of difficulty for effective application of payment card systems is for vending machines. Vending machine transactions are generally of relatively low value and vending machines while many are connected to a communications infrastructure, many are not. Many vending machines are provided with a payment card interface and typically an associated communications interface to obtain authorisation for a payment card transaction, but this model is unsatisfactory both for vendors (as it drives up the cost of the vending machine) and for users (as the user experience is typically relatively poor).
One way to expand the options for vending machine transactions is to enable transactions using a mobile device. One approach to this is provided by PayRange, who provide a mobile application for a mobile device and a dongle for vending machines allowing short range wireless communication with mobile devices. The mobile application is preloaded with credit, and can then be used in place of cash in a short range wireless transaction with the enabled vending machine.
This approach has the disadvantage of requiring the application to be preloaded with credit, thus committing customer funds to use with vending machines at some point in the future. It would be desirable to enable transactions between mobile devices and vending machines that did not require precommitment of funds in this way, but provided a fully satisfactory user experience, preferably without affecting the cost of ownership and operation of vending machines to the vendor.